Haitong International: Initially rates MIXUE GROUP (02097) above market rating with a target price of HK$482

HAITONG INT'L released a research report stating that it is expected that the revenue of MIXUE GROUP (02097) will be 33.0/38.4/42.2 billion yuan respectively for the years 2025-27, with net profits of 5.8/6.74/7.5 billion yuan. Considering the company's leading position in the global ready-to-drink beverage industry, MIXUE GROUP is given a 25X PE valuation for 2026, with a corresponding target price of 482 Hong Kong dollars (HKD/CNY=0.91). The first coverage gives an outperform rating. The report states that the subsidies from food delivery platforms in 2025 have brought some incremental growth to the company's same-store sales, but as the product prices are relatively low, the company did not actively participate in subsidy activities. With the subsidy efforts gradually decreasing, the same-store growth pressure in 2026 is relatively smaller within the industry, and the recently introduced breakfast products are expected to bring some incremental sales for individual stores. In addition, recent implementation of social security and tax-related policies is expected to promote more standardized and sustainable industry development, allowing leading brands to gain higher market share. Key points from HAITONG INT'L: MIXUE GROUP: China's largest ready-to-drink beverage chain store enterprise MIXUE GROUP is the world's leading and China's largest ready-to-drink beverage chain store enterprise. As of 1H25, MIXUE GROUP has a total of 53,014 stores worldwide, including 48,281 in China and 4,733 overseas. According to data from ZHOU Insight, based on the GMV in 2023, MIXUE GROUP is the fourth largest ready-to-drink beverage company globally, with a market share of 2.2%. Ready-to-drink Beverages: Upgrade demand for ready-to-drink beverages, leading growth in China's beverage market Ready-to-drink beverages are essentially a consumer upgrade demand that has emerged in the context of economic growth and increasing disposable income per capita, partially replacing ready-to-drink beverages and leading growth in the beverage market. Among them, ready-to-drink tea has more growth opportunities in lower-tier markets. According to ZHOU Insight's forecasts, most of the new stores of ready-to-drink tea shops in China in the future will be located in third-tier and lower-tier cities, which is conducive to the MIXUE GROUP's Milk Tea Town brand gaining a higher market share. Milk Tea Town: Leading in the tripartite total cost Milk Tea Town plans to continuously build and strengthen its core competitiveness based on "supply chain + brand IP + store operations", striving to achieve total cost leadership in the "tripartite" model. (1) Digital end-to-end supply chain: As the earliest company in China's ready-to-drink beverage industry to establish a central factory, MIXUE GROUP has now established a procurement network for upstream raw materials covering six continents and 38 countries, and has five production bases. (2) The industry's unique super IP "Snow King": "Snow King" as the only super IP in China's ready-to-drink beverage industry has attracted a large number of consumers and fans to the Milk Tea Town brand. (3) Shared interests with franchisees to promote continuous store expansion: Relying on an excellent single store model, MIXUE GROUP has been able to maintain a net increase of approximately 8,000 stores per year since 2020, with a huge store network of over 48,000 stores in China as of 1H25. Future increments: Domestic + Overseas + Sub-brands In the domestic market, while continuously entering blank spots, seize the opportunity for rapid development in lower-tier markets, and continue to penetrate down with strong supply chain and store management capabilities. In the overseas market, Southeast Asia is steadily developing and seeking progress, continuously optimizing business capabilities, and new markets such as Central Asia and the Americas will gradually strengthen. In terms of sub-brands, the second growth curve has been established through the Lucky Coffee brand, and the newly acquired Craft Beer Fudejia brand is expected to further enhance the company's layout in the ready-to-drink beverage sector. Risk factors: Economic and consumption growth lower than expected, slowing growth of the ready-to-drink beverage market, intensifying industry competition, food safety risks, and expansion speed lower than expected.